The American housing market is about to collapse and it is all because of Elon Musk and his virally criticised decision. Musk’s Department of Government Efficiency (D.O.G.E) has halted all the housing projects in the US including a $1 billion program aimed at preserving affordable housing. This move is a part of the broader funding freezes at the U.S. Department of Housing and Urban Development (HUD), as per an internal document reviewed by The Associated Press.
The American housing dreams shatter hard?
A report from Mitrade.com revealed that the monthly housing costs in the US soared to a record $3,104 in January. Along with this, the mortgage payments have doubled in the past five years, averaging $2,237 per month with the additions of $416 for property taxes and $361 for insurance. The home prices within the country have surged to the second-highest in history ranging from $31,300 to a median of $446,300.
This move from D.O.G.E has reportedly affected housing projects in over 1,000 communities and forced the closure of at least 8 national organizations that provided technical assistance to housing programs. Major non-profits such as LISC and Enterprise Community Partners have lost $30M in cancelled grants. Not only homeowners but developers and contractors also suffer from mass layoffs with these grants being halted. “This will devastate low-income families,” warned Enterprise CEO Shaun Donovan. “We’re losing thousands of affordable homes and local jobs overnight,” he added.
As per Realtor.com, the American housing market currently requires an additional 3.8 million homes to meet the housing demands of 2024. Now, with D.O.G.E eliminating important funding, this gap is expected to grow and cause some vocal agitation.
Home sales decline and mortgage rates increase
The current condition of the US housing market is neither favourable to the government nor the buyers. The pending home sales saw a 4.6% drop in January with eminent declines in the Midwest, South and West. The Pending Home Sales Index (PHSI) which is a key indicator based on contract signings also fell to 70.6 in January–an all-time low. Additionally, the mortgage rates have seen a sudden rise from 6.91% to 7.04% making owning a home in America a dream too difficult to realise.
With declining affordability and critical funding in no sight, the US housing crisis seems to have just begun.
